Oh those three little numbers, 572, 647,756. What do they really mean and why are lenders so concerned about them? Why should you be concerned?
Well the FICO scoring model (Fair Isaac Company developed the software that determines the score, thus FICO) and virtually all of the lenders and creditors adopted the system about 14 years ago. The problem is they didn’t tell you that they were going to do this and they also didn’t tell you what it means and how to get and keep a score well into the 700 range.
With the FICO scoring system the scores range from 350 on the low end to 850 on the high end. Today only about 1 in 1400 people has a score over 800. Conversely about 1 in 7 have a score under has a score under 600. The average for the U.S. is around 660. So half have a score higher and half have a score lower.
First let me say this, the credit scoring system is a voluntary system that the creditors contribute information at their discretion. There is NO LAW that requires them to list your information, good or bad. The credit bureaus are companies in the business to make a profit for their investors, just like any other company, they are not and never have been a government agency. And you have never asked to participate in this system. But you are anyway. There is no law that says any of your information needs to be reported for 7 years, 7 months, 7 days or even 7 minutes. This is just a rule that the bureau’s and creditors came up with for their system. Also, did you ever notice that they are in a big hurry to get the bad stuff on your report, but it seems that they are never concerned with correcting it to make it right?